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Blockchain technology has become more relevant since the inception of bitcoin, a cryptocurrency that uses the blockchain to store transaction histories.
How Does Blockchain Work?
A Blockchain is a distributed ledger technology, data stored on the blockchain are distributed across multiple computers in different locations. Note that this information is electronically processed, stored in its database, and shared across diverse computers.
That said, a blockchain has a unique data structure. Chronological order is the core of its record formats, each validated block is given a timestamp in the timeline of records therein. While many may not pick notes, the word "Blockchain" are separable into different definitions that make them collectively powerful.
"Chain" represents a data structure, where information is linked to each other in a chronological manner. Each grouped data added to the chain is validated by miners or validators. A consensus has to be attained for data to be concluded as unique or authentic.
"Block" refers to a group of data, recall that data in a chain are linked together, a basic sequence of information positioned based on time. Blocks are data being grouped into a store that has a capacity limit, depending on the network. Data grouped into blocks are closed when filled and linked to the previous block, creating a "block-chain" in theory, where information is linked to each other.
How Is Information Really Immutable In A Blockchain?
Typically, a Blockchain attains immutability because every piece of data is shared across the globe, meaning that for every bitcoin transaction recorded on one computer, for instance, there's a copy of it distributed across many other computers.
Imagine a company's file room, containing all reports on operations. Not only do a vast number of people have access to view its content, but also, a vast number of people have a copy of each and every file/document there is in the room, stored in other locations.
It becomes impossible to get rid of the information therein because the public isn't relying on one source or file room to access it.
Given this example, it is impossible to terminate information stored on a blockchain as there are way too many replicates existing else way.
Blockchain Consensus, How Is Information Validated?
When dealing with data, it's by default a case-sensitive operation. As such, the function is not only to store or record transactions or other data types but also to verify that this information is authentic!
Each network has its own set of consensus mechanisms, these methodologies aid in the validation of data on the blockchain.
For example, bitcoin uses a proof-of-work(PoW) consensus algorithm where miners compete with computational power to solve a mathematical puzzle and validate a block. This consensus mechanism requires high computing power which is attainable through running heavy hardware.
Miners have to "work" to actually mine a bitcoin block. A "winner" is incentivized for the work done and this compels everyone to record true transactions. By default, the structural design of the blockchain and its underlying technologies make it expensive for bad actors to make an entry.
For instance, if invalid information is attempted through a block, every other miner will cross-check their copies of the ledger and spot the outstanding record.
Is The Blockchain Secure?
To better explain the previous section, we can see how the consensus mechanisms help in keeping the network secure.
Using Bitcoin proof-of-work as a case study, mining bitcoin isn't cost-efficient, and so, plotting an attack becomes highly expensive.
As aforementioned, to mine a bitcoin block, one has to power in the effort, to work, solve a mathematical puzzle and win a reward. It is more economical to compete to validate true transactions than attempt to tamper with the ledger, and here's why:
For starters, blockchain is quite a unique piece of technology, and the idea of chained blocks plays a significant role in its security. Miners actively collect transactions, group them into blocks, and post them to the blockchain. Once a transaction is posted to the blockchain, it cannot be reversed, unless there's a consensus among the miners.
Transactions don't just appear on the network, they have to be initiated by authorized accounts, using private and public keys. When a miner picks a transaction to group and post to the blockchain, every other miner does the same, so this makes the task shared across different people, therefore enhancing the decentralization of the network, this is also where a consensus comes in, where miners agree to all data posted, the miner that solved the puzzle or did the most work receives the rewards.
When an invalid transaction is attempted through a block, other miners vote against it because it isn't present in their copy of the ledger, which makes it impossible for bad actors to print counterfeits of currencies and also avoids double-spending.
This structure is similar across all blockchains, what differs is the consensus mechanism. Bitcoin proof-of-work consensus mechanisms, being not so cost-efficient makes it a grand security measure.
Why waste energy trying to tamper with the ledger when you'd only lose at the end? Miners instead will record true transactions so as to compete fairly for block rewards, attempts to do the opposite only result in running on a negative profit balance.
Now congratulations, you know more about the blockchain and its functions.